Several Walgreens sites in Milwaukee — including closed stores — are under rental agreements that prohibit other pharmacies or certain other businesses from opening in those locations without the company’s permission.
Some of those terms last for decades. That’s according to reporting from the Milwaukee Journal Sentinel.
In October 2024, Walgreens announced it would be closing 1,200 stores nationally over three years, in the face of low drug reimbursement rates and slower consumer spending.
Eight Walgreens locations have closed in Milwaukee.
The reporting from the Milwaukee Journal Sentinel shows that for several Walgreens sites, including one that is closed, Walgreens is paying on leases with decades-long terms.
Some of them include provisions that prevent other pharmacies and a range of other businesses from opening in former Walgreens buildings without the company’s permission. That could mean the buildings are more likely to sit vacant if a Walgreens doesn’t reopen.
Chad Venne says this is not unheard of with commercial leases. He is the director of UWM’s real estate program in the Lubar College of Business.
Venne says it’s common for tenants like Walgreens, or other large corporations, to have provisions in their lease agreements that pertain to their reputation and potential competition.
There’s the exclusive use provision, for example.
"The intent is to basically protect the business from competition coming into a center. And so, when these agreements are put in place — I'll use an example of a coffee shop. If you are an operator of a coffee shop, whether that's Starbucks or even a small neighborhood coffee shop, you want some protections from the landlord being able to put a competitor in the same building, in the same shopping center as you do, because it's going to impact your sales," Venne says.
To be clear, pharmacies can open in the neighborhood where Walgreens stores have closed, just not where the Walgreens used to be.
Then there’s the prohibited use provision, which Venne says a large corporation might put in place to protect the company’s reputation.
"A lot of these larger corporations, they have an image and a brand that they’re trying to convey, and they want to make sure that if they’re going to commit to a long-term lease in a place, that the landlord doesn’t just have the ability to put any type of operation they want in a shopping center that they might view as an impact to their brand reputation or to the use that they’re looking to operate," Venne says.
In the lease at the former Walgreens on North King Drive and West Hadley Street, businesses including children’s play or party facilities and theaters were prohibited, according to the Journal Sentinel.
Venne does think the length of some of the Walgreens leases in Milwaukee is unique.
He says a 25-year lease for this type of business is normal.
The lease at the former King Drive Walgreens was signed in 2009 and lasts until 2084. That’s 75 years.
"Many of them also have renewal clauses in there which allows the tenant the ability to continue their lease on usually for five-year additional terms. And so, when you look at the article, it’s referencing, I think, 75-80 years — well what that's taking into consideration is the original 25 years of that lease plus these additional renewal options that get put on on the end of the lease term," Venne says.
Venne does recognize the inconvenience to residents where Walgreens locations have closed, especially since no other pharmacy can fill the void in the building. He says, nobody wants to see a building sit empty for years.
"Now if you live in one of those communities, you’re just kind of subject to this agreement that you had no control over, nothing to do with. And yeah, it can have a big impact on the neighborhood," he says.
But Venne says in many of these situations, the tenant is in a valid lease, so legal challenges might be a long shot.
However, he says there are some efforts in places like San Francisco and New York to curb vacant properties.
"I know that certain municipalities are trying to add a vacancy tax. So, if you’re going to just own a property and not have anything operating in there, you still have the legal ability to do so, but they’re gonna try to charge you some sort of tax or a fee to try to encourage landlords and tenants to renegotiate these terms to get out of it," Venne says.
In April, Milwaukee leaders approved legislation that would require pharmacies to provide advance notice before closing.
Walgreens did not respond to a request for comment by deadline for this story.
